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Haynes v. Transamerica Corp.

United States District Court, D. Colorado

January 18, 2018

GARY L. HAYNES, for and on behalf of the Insurance Trust of trustee Marjorie Unger, Plaintiff,
TRANSAMERICA CORPORATION, a member of Aegon Group, doing business as Transamerica Life Insurance Company, Defendant.


          Kristen L. Mix United States Magistrate Judge

         This matter is before the Court on Defendant's Motion for Summary Judgment [#64][1] (the “Motion”). Plaintiff filed a Response [#70] in opposition to the Motion, and Defendant filed a Reply [#73]. The Court has reviewed the Motion, the Response, the Reply, the attached exhibits, entire case file, and the applicable law, and is sufficiently advised in the premises. For the reasons set forth below, the Motion [#64] is GRANTED.[2]

         I. Summary of the Case

         The details underlying the claims in this case are not relevant to resolution of the present Motion [#64]. In short, however, Plaintiff, as purported trustee of an insurance trust (the “Trust”) established by Marjorie Ann Unger (“Ms. Unger”), asserts three claims seeking damages from Defendant, the insurer: (1) breach of contract, (2) common law bad faith, and (3) unjust enrichment. See Am. Compl. [#33].

         II. Standard of Review

         The purpose of a motion for summary judgment pursuant to Fed.R.Civ.P. 56 is to assess whether trial is necessary. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Pursuant to Fed.R.Civ.P. 56(c), summary judgment shall be granted if “the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” An issue is genuine if the evidence is such that a reasonable trier of fact could resolve the issue in favor of the nonmoving party. Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986). A fact is material if it might affect the outcome of the case under the governing substantive law. Id.

         The burden is on the movant to show the absence of a genuine issue of material fact. Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670-71 (10th Cir. 1998) (citing Celotex, 477 U.S. at 323). When the movant does not bear the ultimate burden of persuasion at trial, the “movant may make its prima facie demonstration [of the absence of a genuine issue of material fact] simply by pointing out to the [C]ourt a lack of evidence for the nonmovant on an essential element of the nonmovant's claim.” Id. at 671. If the movant carries the initial burden of making a prima facie showing of a lack of evidence, the burden shifts to the nonmovant to put forth sufficient evidence for each essential element of his claim such that a reasonable trier of fact could find in his favor. See Liberty Lobby, 477 U.S. at 248; Simms v. Okla. ex rel. Dep't of Mental Health & Substance Abuse Servs., 165 F.3d 1321, 1326 (10th Cir. 1999). The nonmoving party must show the existence of a genuine dispute of a material issue by going beyond the allegations in its pleading and providing “specific facts showing there is a genuine issue for trial.” Celotex, 477 U.S. at 324. To satisfy its burden of providing specific facts, the nonmoving party must tender affidavits or other competent evidence. Concrete Works, Inc. v. City & Cty. of Denver, 36 F.3d 1513, 1517 (10th Cir. 1994). However, “[w]hen opposing parties tell two different stories, one of which is blatantly contradicted by the record, so that no reasonable jury could believe it, a court should not adopt that version of the facts for purposes of ruling on a motion for summary judgment.” Scott v. Harris, 550 U.S. 372, 380 (2007); Thomson v. Salt Lake Cty., 584 F.3d 1304, 1312 (10th Cir. 2009). Conclusory statements based merely on conjecture, speculation, or subjective belief are not competent summary judgment evidence. Bones v. Honeywell Int'l, Inc., 366 F.3d 869, 875 (10th Cir. 2004). The nonmoving party's evidence must be more than “mere reargument of [his] case or a denial of an opponent's allegation” or it will be disregarded. See 10B Charles Alan Wright et al., Federal Practice and Procedure § 2738 at 356 (3d ed. 1998).

         III. Analysis[3]

         A. Standing

         Defendant argues that Plaintiff has failed to demonstrate standing to pursue this lawsuit on behalf of the Trust. Motion [#64] at 7-8; Reply [#73] at 3-5. Pursuant to Article III of the United States Constitution, federal courts have jurisdiction to hear only particular cases and controversies. Colo. Outfitters Ass'n v. Hickenlooper, 823 F.3d 537, 543 (10th Cir. 2016) (citing Susan B. Anthony List v. Driehaus, 134 S.Ct. 2334, 2341 (2014)). “To satisfy Article III's case-or-controversy requirement, a plaintiff must demonstrate standing to sue by establishing (1) an injury in fact, (2) a sufficient causal connection between the injury and the conduct complained of, and (3) a likel[ihood] that the injury will be redressed by a favorable decision.” Id. (internal quotation marks omitted).

         “[A] federal court can't ‘assume' a plaintiff has demonstrated Article III standing in order to proceed to the merits of the underlying claim, regardless of the claim's significance.” Colo. Outfitters Ass'n, 823 F.3d 537, 543 (citing Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94 (1998)). “[T]he elements of standing ‘are not mere pleading requirements but rather an indispensable part of the plaintiff's case.'” Colo. Outfitters Ass'n, 823 F.3d 537, 544 (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992)). Therefore, “each element must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation.” Id.

         As is relevant here, pursuant to Fed.R.Civ.P. 17(b)(3), “[c]apacity to sue or be sued is determined . . . by the law of the state where the court is located . . . .” Under Colorado law, [4] a “fiduciary” is defined as “one or more persons designated in a will, trust instrument, or otherwise, whether corporate or natural persons and including successors and substitutes, who are acting in any of the following capacities: . . . (IV) Trustees.” Colo. Rev. Stat. § 15-1-802(3)(a). “During the period of administration of the . . . trust and until final distribution, a [trustee] has the power to perform, without court authorization, every act reasonably necessary to administer . . . the trust . . . .” Colo. Rev. Stat. § 15-1-804(1). This includes the power “[t]o pay, contest, or otherwise settle claims by or against the . . . trust, including taxes, assessments, and expenses, by compromise, arbitration, or otherwise . . . .” Colo. Rev. Stat. § 15-1-804(2)(r).

         There appears to be no dispute that John Unger (“Mr. Unger) is the only trustee actually named in the Trust agreement. See Motion [#64] at 8; Response [#70] at 1-2. The dispute here is whether Plaintiff, Gary L. Haynes, despite not being formally named as a trustee on the Trust, may still act on behalf of Trust with respect to litigating the Trust's claims in this lawsuit. Motion [#64] at 8. The Court first considers whether Plaintiff has provided evidence demonstrating that he was, in fact, a formal trustee of the Trust. See Colo. Outfitters Ass'n, 823 F.3d at 544 (stating that Plaintiff bears the burden of proof on standing).

         Plaintiff states, without citation, that “[b]oth the insured Mrs. Unger and her son John Unger gave powers of attorneys allowing Mr. Haynes to act as trustee for the trust.” Response [#70] at 1; see also Id. at 2 (stating, without citation, that “Mrs. and Mr. Unger gave a power of attorney for Mr. Haynes to act”). Plaintiff further avers, without citation, that “[t]he powers of attorney were intended to give Mr. Haynes the full authority to manage the trust including working with Defendant.” Id. at 2. Plaintiff also states: “Attached is the copy of the [sic] notifying the Defendant of the fact that Mr. Unger appointed Mr. Haynes as the acting trustee, attached hereto is Power of Attorney.” Id. However, Plaintiff does not cite to a specific exhibit containing this Power of Attorney, and the Court has not discovered this document among Plaintiff's exhibits as a result of its own review of the record.[5] Plaintiff later states, again without citation, that “[b]ecause Mr. Unger could not be available he transferred the trustee duties to Mr. Haynes.” Response [#70] at 6. Plaintiff also states, without citation, that: “It is not a correct statement of fact to state that there was no notice that Mr. Unger wanted to appoint Mr. Haynes.” Id. at 7. Plaintiff notes, without citation, that “[i]n 2011 attempts were made to change the trustee's name.” Id. at 8. However, Plaintiff concedes, without citation, that “Defendant would not recognize the change or accept the use of a power of attorney.” Id.

         Based on this recitation, there appears to be utterly no evidence, and certainly no evidence properly brought to the Court's attention, that Plaintiff was ever formally added to the Trust as trustee or otherwise formally empowered to act on behalf of Mr. Unger, who was undisputedly formally named as the trustee of the Trust. Thus, the Court finds that there is no genuine issue of material fact on this issue and that Plaintiff has not met his burden of demonstrating that he was, in fact, a formal trustee of the Trust. See Colo. Outfitters Ass'n, 823 F.3d at 544.

         The Court next turns to consideration of whether Plaintiff has provided evidence that he was a de facto trustee of the Trust. Neither party suggests a standard which the Court should use to determine whether Plaintiff was a de facto trustee. No Colorado state court nor federal district court within the Tenth Circuit appears to have enunciated a test for determining whether a person may legally be deemed a de facto trustee, although these courts have offered their tacit approval of de facto trustees in various contexts. See, e.g., City of Pueblo v. Grand Carniolian Slovenian Catholic Union of the U.S. of Am., 358 P.2d 13, 16 (Colo. 1960); In re Woods, 215 B.R. 623, 627 (10th Cir. 1998) (citing In re Holiday Isles, Ltd., 29 B.R. 827, 829 (Bankr. S.D. Fla. 1983) (stating that “[c]ourts faced with a trustee's failure to technically qualify have long recognized the concept of a ‘de facto' trustee of a bankrupt estate”); Shackelford v. Lake, No. CIV-15-0218-HE, 2016 WL 6993960, at *5 (W.D. Okla. Nov. 29, 2016) (“As his mother's attorney-in-fact, as the manager of the LLC, and as de facto trustee of her trust-like device, Mr. Shackleford [sic] clearly owed his mother fiduciary responsibilities.” (internal citation and footnotes omitted)); United States v. Novotny, No. 99-D-2196, 2001 WL 1673628, at *3 (D. Colo. Nov. 8, 2001) (“Novotny and his wife have served as appointed or de facto trustees during the entire existence of the Trusts.”); Yeast v. Pru, 292 F. 598, 603 (D.N.M. 1923) (“Therefore these trustees, if not de jure, were unquestionably de facto, trustees of the respective towns they assumed to represent and act for as such trustees.”).

         In the absence of any relevant guidance from the State of Colorado or the Tenth Circuit federal courts regarding the standard for determining a de facto trustee, the Court turns to the standards enunciated by these courts for determining de facto status in other contexts, i.e., corporate and governmental actors. These standards are materially similar.In the corporate context, “[a] de facto officer is defined as one who, under color of authority, exercises a corporate office.” Kuehn v. Kuehn, 642 P.2d 524, 526 (Colo.App. 1981). “The underlying policy for the doctrine of de facto officers is the protection of the interests of the public and individuals dealing with such ‘officers.'” Id. In Kuehn v. Kuehn, 642 P.2d at 526, the Colorado Court of Appeals held that “[b]y clothing [the defendant] with the indicia of a corporate officer through the power of attorney, the assignment, and the quitclaim deed, [the plaintiff] gave [the defendant] de facto officer status.”

         In People v. Sherrod, 204 P.3d 466, 471-72 (Colo. 2009), the Colorado Supreme Court thoroughly explained the de facto doctrine in the context of public employment:

The situation now before us, where an irregularity exists in an otherwise qualified county judge's authority to act as a district judge, is analogous to cases of de facto officers. “The de facto officer doctrine confers validity upon acts performed by a person acting under the color of official title even though it is later discovered that the legality of that person's appointment or election to office is deficient.” Ryder v. United States, 515 U.S. 177, 180, 115 S.Ct. 2031, 132 L.Ed.2d 136 (1995); see also McDowell v. United States, 159 U.S. 596, 601-02, 16 S.Ct. 111, 40 L.Ed. 271 (1895) (“[T]he rule is well settled that where there is an office to be filled, and one, acting under color of authority, fills the office and discharges its duties, his actions are those of an officer de facto, and binding upon the public.”). According to the United States Supreme Court,
The de facto doctrine springs from the fear of the chaos that would result from multiple and repetitious suits challenging every action taken by every official whose claim to office could be open to question, and seeks to protect the public by insuring the orderly ...

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